Seoul stocks dip, led by POSCO; Hyundai surges

(Updates to mid-morning)

SEOUL, March 11 (Reuters) - Seoul shares eased 0.2 percent
on Tuesday, led by steel makers such as POSCO (005490.KS: Quote, Profile, Research, Stock Buzz) and
shipbuilders, as the local currency fell to an almost
two-year-low, making import prices of raw materials more costly.

Meanwhile, shares of Hyundai Motor Co (005380.KS: Quote, Profile, Research, Stock Buzz), South
Korea's top auto maker, surged 4.52 percent to 67,000 won on
prospects of cheaper and more competitive car prices.

The South Korean won fell as low as 974.2 per dollar during
the day, its weakest since late-March, 2006, hitting shares that
are sensitive to the cost of imported goods.

POSCO (005490.KS: Quote, Profile, Research, Stock Buzz), the world's fourth largest steel producer,
fell 4.57 percent to 480,000 won, and Hyundai Steel (004020.KS: Quote, Profile, Research, Stock Buzz)
was down 3.35 percent at 69300 won. Dongkuk Steel (001230.KS: Quote, Profile, Research, Stock Buzz)
dropped 2.78 percent at 41,900 won.

By 0139 GMT the main KOSPI index was down 0.21
percent to 1,621.79 points, pulling back up from an initial
1,602.35 session low.

Sectors relying heavily on imported raw materials were under
pressure, with world's top shipbuilder Hyundai Heavy Industries
(009540.KS: Quote, Profile, Research, Stock Buzz) falling 2.69 percent to 343,500 won, and STX
Shipbuilding (067250.KS: Quote, Profile, Research, Stock Buzz) dropped 0.59 percent at 33,550 won.

"The falling won is bad news for industrial shares, as it
brings up the cost issues. Raw materials are already expensive
enough right now, with the ongoing rally on the commodities
front," said Oh Hyun-seok, an analyst at Samsung Securities.

Persistent worries about a sharp slowdown in the United
States, South Korea's second largest export market, continued to
put pressures on electronics shares, with Samsung Electronics
(005930.KS: Quote, Profile, Research, Stock Buzz) losing 1.08 percent to 548,000 won.

Meanwhile Hyundai Motor (005380.KS: Quote, Profile, Research, Stock Buzz) shares shot up along with
affiliate Kia Motors (000270.KS: Quote, Profile, Research, Stock Buzz) on hopes that a weaker won will
boost their competitiveness abroad.

"Hyundai Motors and other South Korean automakers'
competitiveness in exports will strengthen relative to Japanese
automakers since the dollar continues to tumble against the yen."
said Han Kum-hee, an analyst at Samsung Securities.

Transportation companies that are sensitive to oil prices,
such as Korean Air (003490.KS: Quote, Profile, Research, Stock Buzz), came under pressure after news
overnight that oil prices roared to another record over $108 a
barrel. [ID:SYD262601]

Korean Air Line (003490.KS: Quote, Profile, Research, Stock Buzz), South Korea's largest air
carrier lost 3.69 percent at 62,700 won. Asiana Air 020560.KQ
also fell 0.44 percent to 6,720 won.

Financial shares were also hit, firmly tracking their Wall
Street peers, which declined overnight on rumours that Bear
Sterns Cos Inc. BSC.N is facing a cash shortage, strengthening
the conviction that more credit related losses are ahead. Bear
Sterns dismissed it as "totally ridiculous" [ID:N10492330]

Kookmin Bank (060000.KS: Quote, Profile, Research, Stock Buzz) fell 0.92 percent to 53,800 won, and
Shinhan Financial Group (055550.KS: Quote, Profile, Research, Stock Buzz) shed 1.12 percent to 48,550
won.

(Reporting by Park Jung-youn and Park Ju-min; Editing by
Keiron Henderson)